Increased plasma levels of free fatty acids are associated with insulin resistant states, including abdominal obesity and type 2 diabetes mellitus. Abundant data support a important role for fatty acids in the pathogenesis of insulin resistance, both in peripheral insulin-sensitive tissues and in the liver, and insulin secretory dysfunction. Despite the clear potential role for free fatty acids as key to the multi-organ patho- physiology of type 2 diabetes, we do not understand the cellular and molecular mechanisms underlying fatty acid-induced insulin resistance. Given the importance of hepatic insulin action and glucose metabolism in maintenance of glucose homeostasis and the increased hepatic glucose production characteristic of type 2 diabetes, our investigation has focused on mechanisms for the induction of hepatic insulin resistance by saturated fatty acids. Preliminary data indicate that palmitate exposure inhibits insulin signaling to PI 3-kinasedependent pathways and inhibits insulin receptor protein and gene expression in a beta-oxidation- dependent manner. These studies are consistent with the long-term objective of the K08, namely to further define mechanisms of nutrient modulation of insulin action. Support is therefore sought through the R03 mechanism for supplemental funding to address the following specific aims during the final year of K08 funding: 1. To determine the discrete metabolic and/or signal transduction pathways by which palmitate or its oxidation product(s) downregulates insulin receptor gene expression and signaling in cultured cells. 2. To determine the effects of saturated fatty acids on insulin signal transduction and gene expression in the perfused rat liver. The long-term goal of these studies is to understand the pathophysiology of fatty acid-induced insulin resistance and to develop novel drug targets to ameliorate hepatic insulin resistance and type 2 diabetes.